The Executive Committee of the International Monetary Fund approved the third revision of the program this Thursday in Washington with Argentina and therefore authorized its disbursement in the next few hours of $6 billion which will go directly to the coffers of the Central.
In a statement, the IMF underlined the policies implemented in recent months by Minister Sergio Massa “It’s starting to pay off“, even if the macroeconomic conditions remain “fragile” and then the “decisive implementation” of the program will be “fundamental”.
The table thus concluded the process of a new revision that had been sent to him on 2 December from personal Fund technician, led by Luis Cubeddu and his team, who worked for several weeks in Buenos Aires and Washington with the Argentine economic authorities.
Following the board meeting, IMF First Deputy Executive Director Gita Gopinath said in a statement: “The toughest macroeconomic policies implemented since July begin to bear fruit inflation is moderating, the trade balance is improving and reserve coverage is gradually tightening”.
“However, macroeconomic imbalances persist and conditions remain fragile.S. Therefore, continued and improved implementation of the program will be critical to achieving the key objectives of the program and maintaining the program as an anchor for stability.”
Argentine authorities they had asked for a waiver or renunciation in order to be able to implement the “soy dollar” and the “Qatar dollar”, measures which are opposed by some officials of the Fund, who believe that these measures can provide temporary relief but are not effective over time.
The IMF gave them the waiver, but warned against multiple stocks and exchange rates. “Currency restrictions and multi-currency practices should be avoided and disarm as soon as conditions allow and macroeconomic imbalances are addressed,” they said in the statement.
The Fund believes that the fiscal and monetary targets as of September 30 (when the third review was closed) have been met and that the targets are on track by the end of the year.
The goals should close this year with a Tax deficit of 2.5%. (1.9% next year) ea monetary issue at 1%.
As for reserves, the program forecasts that there will be an accumulated amount of 5,000 million dollars at the end of the year and should close next year with 9,800 million in the coffers.
“The fiscal consolidation envisioned in the budget will be necessary to support disinflation and the reserve accumulation process, ease funding pressures and strengthen debt sustainability,” they said in the statement Thursday.
“Reducing the primary fiscal deficit to 1.9% of GDP in 2023, while providing room for priority infrastructure spending, will require continued efforts to mobilize revenues and tighten spending controls and, most importantly, improve the targeting of energy subsidies and social assistance. The timely application of the measures will be essential to increase credibility”, they estimated
The funds should be transferred and arrive in the next few hours (this is done through a special international bank based in Basel), before the board’s end-of-year break. Most of that money will be used to meet obligations to the agency itself. Indeed, in the last few hours, the government has transferred about 2.7 billion dollars to the IMF to meet the deadline schedule with the certainty that the new funds would arrive.
Another part of the board discussion was how to comply with the objectives for the fourth review, those whose deadline is December 31st. Minister Massa is optimistic, he believes he can easily reach the 5,000 million dollars needed in reserves thanks to the acceleration of the soybean dollar and an exchange with China which will have a freely available part.
The Fund is alert to next year’s numbers, which include the presidential election, and understands that there may be pressure on government spending. However, they believe that Massa’s adjustment program and implementation are on track and that this could lead to a reduction in inflation, which would benefit the population at large. Goals for next year remain intact.
Source: Clarin
